Display buyers can expect prices to continue to fall for plasma display panels (PDP) because of stiff competition.

While demand has been strong and supply tight, plasma display manufacturers have been able to reduce prices because of larger PDP fab sizes that are boosting production efficiencies, improved manufacturing processes and declining costs for display materials.

The average price of a 40.x–44.x panel dropped from $527 in the first quarter to $461 in the third. It will drop to $446 in the fourth quarter, according to iSuppli.

Supply has been tight because panel makers scaled back production, says Riddhi Patel, principal analyst for television systems at iSuppli.

Most panel makers have cut their production utilization rates to around 70%, except for Matsushita, which remains at 100%. "In order for plasma manufacturers to continue to be successful in the market, they must weather the storm of LCDs while focusing consumer interest on PDPs' attractive form factors and reasonable prices," says Patel.

While prices are falling despite tight supply, global PDP revenue will rise to $8.6 billion in 2007, up 11.8% from $7.7 billion in 2006. Revenue will rise again in 2008, swelling to $10.2 billion, up 18.5% from 2007 because of increased production of 50-inch and larger sizes. However, due to increased competition and continuous price pressure, the market will then undergo a revenue contraction, declining to $8.7 billion by 2011.